Military widows forced to remarry to get benefits

The ‘widow’s tax’ penalizes spouses who choose not to remarry

JeanettePavini

This is Part 1 in a two-part series on a law known as the widow’s tax. Part 2, on how and why the law came to be, will appear later in November.

Award-winning broadcast journalist and author Jeanette Pavini writes the Buyer Beware column for MarketWatch and wants to hear your stories, questions, problems and complaints. Write to her at BuyerBewareMKTW@gmail.com.

SAN FRANCISCO (MarketWatch) — On the morning of Sept. 6, 2010, Vivianne Wersel made breakfast for her two teenage kids as they wished her a happy 57th birthday.

“It was just another day for me,” Wersel says now. “Nothing special, no special Entenmanns pastry for breakfast.” Those pastries were a tradition Wersel had once shared with her husband Rich, an infantry officer in the U.S. Marine Corps, who died of a service-related heart attack in 2005 at the age of 43 — just a week after he returned from his second tour of duty in Iraq.

U.S. troop focus shifts to Asia

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Following U.S. troop reductions in Afghanistan and Iraq, the U.S. will focus its military presence in Southeast Asia, according to U.S. Defense Secretary Leon Panetta. (Photo: AFP/Getty Images)

“I had just erased the recorded messages from our answering machine that I saved while he was in Iraq,” Wersel says. “Sometimes I would play them just to hear him say, ‘hello dear’ in his deep voice. Since I had him home there was no reason to save them, so I erased them. He died the next day.”

Since her husband’s death six years ago, Wersel has been receiving Dependency and Indemnity Compensation (DIC) benefits from the U.S. Department of Veterans Affairs. This is compensation or reparation to widows and widowers for the death of their military spouse. Most surviving spouses receive $1,154 a month.

But when she turned 57 in September 2010, Wersel became eligible for another monthly benefit under one condition: she must remarry.

Military widows and widowers can receive an additional monthly annuity through the Department of Defense called the Survivors Benefit Plan (SBP), but — because of a perplexing and logic-defying federal law known as “the widow’s tax” — only if they remarry after the age of 57.

This is despite the fact that military couples have voluntarily paid significant premiums for their SBP policies, which are annuities that are triggered when a military spouse dies. The SBP benefit does not require a service-related death.

Confusing rules

If a surviving spouse is eligible for DIC benefits because of a service-related death and they do not remarry or if they remarry before the age of 57, they do not get their Survivor Benefit Plan annuity paid in full. Instead, the Defense Department refunds the premiums and then offsets the SBP benefit dollar for dollar against the VA-paid DIC benefit.

This leaves most spouses with little or no SBP benefit except for the fortuitous few who happen to remarry after the age of 57. Even that small cohort must first pay back a portion of the refunded premiums to activate their SBP benefit. (To complicate this further, if the surviving spouse remarries between the ages of 55 and 57, they receive their SBP annuity but lose their DIC benefit from the VA.)

Meanwhile, if the surviving spouse happens to fall in love and remarries before the age of 55, they lose both types of benefits and receive nothing.

If it sounds confusing, that’s because it is. And widows like Vivianne Wersel say they don’t understand why they have to navigate these irrational rules. “Why should I have to connect with another man and marry to get the benefits that we worked for as a team,” Wersel says. “This is an insult to him — for the government to encourage his wife to remarry as criteria.”

Senator Bill Nelson of Florida, a former insurance commissioner, has been working for 10 years to repeal the current wording in the law.

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